Week 26 – Budgeting and Spending

Improving Your Relationship with Money

According to Marriage.com, money is the second leading cause of divorce. Number one is infidelity. Number three is communication problems and constant arguing. Money is not only a big deal in relationships, it's a big deal for you individually. Not being able to consistently meet your or your family's needs and being stressed out about always being broke or in debt all the time are real drains on your life.

Take a few minutes and think about how you handle money. Are there two or three things you know you're spending too much on? Do you buy too many things that cost a little too much on impulse? Do you eat out too much or buy too many fun food or snack items at the grocery store? Do you spend too much on bad habits or entertainment? Are you loaning money to people who don't pay you back?

Getting on top of your finances can put a lot of energy back into you and your relationship. Even if, or especially if, you don't have a lot of money to start with. Being on top of your finances can bring a real sense of freedom and control to you. The best news is that it really isn't very hard, and it really doesn't take a lot of time. You'll probably find you have more money for what you really want in the process.

How to Start Putting Together Your Budget

Your budget has two main parts: your income and your expenses. Collect your pay stubs and bills for the last 2-3 months. If you have bank statements, collect them, too.

On a lined sheet of paper set up four columns: Category, Due Date, Amount Budgeted and Amount Paid.
Put your Income at the top and then each bill with its due date and the expected or budgeted amount. The expected amount might be the average of the last few months or it might be the most typical amount. It's better to be slightly high than consistently low.
Add additional rows for things like food or gas that don't have "bills."
If your income varies, figure out an expected amount like you did for the bills. It's safer to be a little low here rather than high. You want to estimate what a safe working amount is for your budget.
You might find it hard to estimate categories like food and other. There are guidelines below to help.
Here are some basic categories: Income, rent/mortgage, food, cigarettes, alcohol, pets, electricity, gas, water, phone, cable, internet, car/gas, insurance, debt, other, savings and giving.
Add categories to track stuff you want to know more about or that you know you have trouble with.
Keep your receipts until you can write them down on a log sheet.
Schedule a time to update your budget at least every week or two. If you are in a relationship, do this together if possible. Decide on goals or changes together.
If you like spreadsheets, it's much easier to track all of your details there. Apps like mint can help with this, too. Some apps can be linked to your bank account and cards and categorize your expenses automatically.

Some Basic Guidelines

Here are a few basic guidelines or rules of thumb that can help you get started making better financial plans and choices:

Try to limit rent or mortgage payments to ¼ of your take home. If your rent is more than ⅓ of your take home it is going to start impacting your freedom to enjoy some entertainment, eating out or the "goodies" of life. If your income is on the low side, it will be more difficult to follow this guideline.
You have a lot of flexibility in how you budget for food. Food can easily consume 20-25% of your monthly income for a family of 4 with a modest income. Eating out costs 2.5 to 3 or more times what eating at home does, so limiting eating out will definitely stretch your food budget. What and how you eat can make or break your budget if you aren't taking care. We will talk more about food and food budgeting next week, but for a simple starting place the table below are the recommendations from Mint:


	Recommended
Family Size	Monthly Budget
1 person	$251
2 people	$553
3 people	$722
4 people	$892
5 people	$1,060
6 people	$1,230

Your other or miscellaneous category covering things like entertainment, clothes, household supplies or other things that don't have a category, should be limited to about 10-20% of your take home depending on how detailed your budget is.
You should plan on saving some money from each payday. Even if you make very little, saving a few dollars helps. Saving even as little as $5-20/week builds up if you leave it alone except for real emergencies.
You need an "emergency fund." You should work to save $500, if your income is low. If your income is adequate, you should save $1000. If your income is really low, saving even $100-200 can really help.
If your income is adequate and your debt is under control, you should try to save 10-20% of your income for the long term. You might want to use these funds for buying a car or a home with a good down payment. You may also want to use it for education.
Many Christians value tithing or giving 10% to their home church or other ministries. Giving may be one way you express your gratitude for the blessings in your life.
You should limit your non-mortgage debt to 10-15% of your take home pay. Ideally you should be out of debt. You really need to pay more than the minimum payments on any credit card or similar debt with relatively high interest rates (greater than about 5%).
There are two common strategies for getting out of debt. These are both "snowballing" plans. The first plan can save you a little money. The second plan rewards you for pay a few things off quicker.

You make larger payments ($10-50/month extra) on the debt with the highest interest rate until it's paid off and then use the money you would have paid along with what you were paying on the next highest interest debt.
You again make higher payments, but with this plan you start with the smallest debt and work your way up. Most people are happier with this plan. It feels like you're making progress faster.

Questions for Journaling

How do you and money get along? Are you a penny pincher or big spender? Do you tend to impulse buy or plan? Do you tend to be late with bills? Are you a saver?
How comfortable are you financially? How about your family when you were growing up?
How much debt (credit cards, loans, etc.) are you in? Is it getting harder to keep up?
What's something small that you would be comfortable with starting to doing this week to handle your budget and spending better?

Quotes for the Week

Money is a terrible master but an excellent servant.
– P.T. Barnum

The quickest way to double your money is to fold it in half and put it in your back pocket.
– Will Rogers

Don't tell me where your priorities are. Show me where you spend your money and I'll tell you what they are.
– James W. Frick

Many folks think they aren't good at earning money, when what they don't know is how to use it.
– Frank A. Clark

A wise person should have money in their head, but not in their heart.
– Jonathan Swift

Verses for the Week

Ecclesiastes 10:19c
[M]oney is the answer for everything.

Luke 16:13c
You cannot serve both God and money.

Prayer for the Week

Help me pay attention to way I'm think about and use money this week. I want to be a better steward of what I have. I want to not only meet my needs but also have the resources to be able to bless others. Amen.